According to THE TIMES OF INDIA, Chennai Ed. (Dt.22/Dec/2008), Income Tax Department will start investigating into the Frozen Demat A/cs to find the black money and undisclosed transactions.
A move that should have been done long back when SEBI ordered the freezing of the Demat A/cs without PAN. At last IT Dept & Govt. of India have woken up to the large scale money laundering in Equity Markets and also under reporting of Income from Equity Trading.
IT Dept. should ask NSDL & CDSL to send the summary of transactions every year to verify with the Tax filings if transactions have been reported or not. This though will not cover day-traders as shares they buy will not hit their demat a/cs. But at least it will be a start for the IT Dept. to tap more sources for Direct Tax Collection. Today hardly anybody reports their Share Transactions. Depositaries and Share Brokers, inspite of having the information, get away from not having to report consolidated annual income of their clients from share trading.
NSDL knows the volume & price of each share that is transferred in it’s Demat A/cs. Moreover the complete system is computerised and centrally managed. Collating information required by IT Dept. is not a big effort for NSDL or CDSL.
A small step towards better accountability and universal taxation.